The greatest productive advantage of modern-day American cities is that they form large and integrated metropolitan labor markets. We present new evidence on the importance of self-adjusting commuting and location patterns in sustaining the productive advantages of larger metropolitan labor markets, mitigating the difficulties in coping with their sheer size, and reducing the added burdens on their transportation infrastructure. As a result of these adjustments, the metropolitan labor market—defined as the actual number of jobs in the metropolitan area reached in less than a 1-hour commute—almost doubles in size when the workforce in a U.S. city doubles. More particularly, when U.S. metropolitan areas double in population, commute time should be expected to increase by a factor equal to the square root of 2. Instead, it only increases by one-sixth of that factor because of three types of adjustments that take place as cities grow in population: increases in residential density, locational adjustments of residences and workplaces to be within a tolerable commute range of each other, and increases in commuting speeds brought about by shifts to faster roads and transit systems. The policy implications of these findings are that the more integrated metropolitan labor markets are, the more productive they are. We should therefore support policies that increase overall regional connectivity; policies that allow for speedier rather than slower commuting, for more rather than less commuting, and for longer rather shorter commuting to take advantage of metropolitan-wide economic opportunities; and policies that remove impediments to the locational mobility of residences and workplaces for all income groups so that they can easily relocate to be within tolerable commute range of each other.
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